Archive · 17 Sep 2026
Why Credit Scores Drop Despite On-Time EMI Payments
Paying every EMI on time is important, but it is not the only thing that affects a credit score.
Using a large part of your available credit can make your score fall.
For example, using ₹80,000 out of a ₹2 lakh limit means 40% of the limit is being used.
Applying for many loans or cards in a short time can also hurt because lenders make hard inquiries.
Closing an old credit card may remove useful account history and reduce your total available limit.
Mistakes in a credit report, such as an incorrectly marked late payment, can lower the score too.
India now updates credit information every two weeks, so changes may appear faster.
After a decline, check your updated report for high balances, new inquiries, account changes, and errors.
High credit utilization can lower a score even when card bills are paid in full.
Multiple credit applications create hard inquiries that may signal aggressive borrowing.
Closing an old credit card can reduce account age and increase overall utilization.
Reporting errors, such as incorrect late payments or unfamiliar accounts, can damage a credit profile.
Since January 1, 2025, Indian credit records have been updated fortnightly instead of monthly.
- Who
- Borrowers and credit card users who maintain loans or credit accounts.
- What
- Credit scores can decline despite on-time EMI and credit card payments because of utilization, inquiries, account changes, reporting errors, and other factors.
- When
- Credit reporting updates became fortnightly in India on January 1, 2025.
- Where
- India's credit-reporting system.
- Why
- Payment history is only one part of a credit profile; utilization, recent applications, account age, and lender-reported data also affect scores.
- Illustrative utilization
- ₹80,000 outstanding on a combined ₹2 lakh limit equals 40% utilization.
- Suggested utilization level
- Financial advisors typically suggest keeping usage below 30%, although there is no rigid automatic cutoff.
- Hard inquiries
- Multiple credit applications within a short period can cause a score dip.
- Soft inquiries
- Checking your own credit report does not affect your score.
- Account closure risk
- Closing an older card can reduce available credit and remove account history from the active credit profile.
- Reporting frequency
- The Reserve Bank of India mandated fortnightly credit-report updates effective January 1, 2025.
- Recommended response
- Compare an updated credit file with an earlier copy and check utilization, inquiries, account changes, and payment records.